![]() You can also gift money in a will and/or trust. If the bond is redeemed before it’s five years old, you’ll forfeit the interest from the last three months. After 12 months, the savings bond can be redeemed for its face value, plus any interest it has earned. The savings bond can continue to earn interest for up to 30 years. The money you pay for a savings bond represents a loan to the U.S. Treasury Department in order to fund government activities. The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) are custodial accounts that people often consider for college savings. These accounts typically allow stock, bond, and mutual fund investments. The custodian can withdraw money to pay for legitimate needs of the child. The creator of the account (usually a parent or grandparent) designates a custodian to manage the minor child’s account. Custodial accountsĬustodial accounts are used to hold and protect assets for minors until they reach the age of majority, which is 21 in Massachusetts. As a state-sponsored investment plan, the state coordinates with an asset management company to handle the investment according to the state’s plan features.Ĭontributions to Massachusetts 529 plans of up to $1,000 per year by an individual, and up to $2,000 per year by a married couple filing jointly, are deductible in computing Massachusett s taxable income. They’re invested in mutual funds so they have the potential to grow. Contributions to 529 plan funds are tax-free. You could choose to put the money into a 529 plan, which covers the cost of higher education. Perhaps you hoped the money would be used for the child’s future education, but they choose to purchase a trip or a car with it. One issue with giving a cash gift is that the gift might not be used in the way you intend. The gifts won’t count as taxable income to their grandchildren. So, if Stan and Mary have three grandkids, they could give away $90,000 to their grandkids in 2021 and not incur any gift tax consequences. And they can give that amount to as many grandkids as they want. For married couples, that holds true for each partner. You may give up to $15,000 a year to each grandchild in 2021 without having to report the gifts or being affected by any federal tax consequences. If you’re thinking about gifting money to your grandchild, it’s a good idea to talk to a knowledgeable Massachusetts estate planning attorney. ![]() ![]() The good news is that giving away the money also helps reduce the size of the grandparent’s estate and the tax that will be due upon their death. Many grandparents want to give money to their grandchildren to help them in one way or another. As a grandparent, you want to do what you can to give your grandchild a good life. The relationship between a grandparent and a grandchild is a very special one.
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